With NAFTA on the cliff, Mexico betting strongly to update free trade agreement with Europe

Mexican negotiators are in Brussels this week, with the two sides due to reconvene next week in Mexico.

EU Trade Commissioner Cecilia Malmstrom is expected in Mexico City in the week starting Feb. 19 to help push talks to a close

Mexico believes it can conclude a new free-trade agreement with the European Union before the end of February, Mexican officials have said. The EU and Mexico intend to update a trade deal agreed 21 years ago that largely covers industrial goods. They want to add farm products, more services, investment and government procurement, and include provisions on labor standards and environmental protection.

Mexican negotiators are in Brussels this week, with the two sides due to reconvene next week in Mexico.

The Mexican official said EU Trade Commissioner Cecilia Malmstrom could come in the week starting Feb. 19 to help push talks to a close and to allow an initial deal to be announced, though only if a deal was within reach.

“As of now ... I think we are very close to being in that position,” the official said. The two sides have accelerated talks at the start of 2018, having initially aimed to conclude them by the end of last year. “We are only stopping by to have enough time to sleep and to take flights”

The key challenges are how far to open each other’s markets to food and drink - such as tequila, chicken and asparagus from Mexico and dairy products from Europe - and the EU’s demand to recognize geographical indications.

Such indications protect agricultural produce - for example, dictating that the term “champagne” can only be used for sparkling wine from northern France or, more importantly for Mexico, that the term “manchego” applies to sheep’s milk cheese from central Spain.

Mexico is more used to protecting products with trademarks and has its own cow’s milk “manchego”.

The EU also wants its companies to be able to bid in Mexican government tenders, including at state level. And negotiators will need to establish how foreign investors are protected.

For Mexico, a deal with the EU would be part of a strategy to reduce its reliance on the United States, the destination of nearly 80% of its exports. That has become more urgent, given U.S. President Donald Trump’s threat to scrap the North American Free Trade Agreement, NAFTA.

Mexico is one of eleven countries expected to sign an Asia-Pacific trade pact in March after the United States pulled out of an earlier version.

“Having an updated agreement with Europe is very important, not only economically, but also because this is another step towards strengthening our network of free-trade agreements,” the official said.